According to several reports, the number of donors, especially those with mid-level incomes or below, is shrinking.47
In addition, volunteering rates are declining, hitting a 15-year low in 2015.48 One recent report by the Association for Fundraising Professionals found that the number of smaller gifts (those of $1,000 or less), as well as the number of donors, had slightly decreased compared with 2017 as of the third quarter of 2018.49
At the same time, several recent studies have found that the vast majority of high-net-worth donors continue give to charity, and consider philanthropy a priority.50 These trends suggest that giving by high-net-worth individuals will likely continue to become more prominent in the next two years, especially as mid-level donors navigate the way the Tax Cuts and Jobs Act (TCJA) may impact their filing status.51 This section offers a broad overview of patterns that have emerged before taking a closer look at the various elements within high-net-worth giving.
Rise in High-Net-Worth Giving
Since wealth is associated with charitable giving, the growth in high-net-worth philanthropy may reflect changes in household income over the last twenty years.
According to the Census Bureau, the top 20% of U.S. households received 51.1% of U.S. income in 2015 (the last year for which data is available).52 The top 40% took in 74.3% of U.S. income. That year, the top 5% of U.S. households alone took in 22.1% of U.S. income.
By comparison, in 1995, the top 20% of U.S. households received 48.7% of U.S. income. The top 40% took in 72% of U.S. income.53 That year, the top 5% of U.S. households alone took in 21% of U.S. income. Though these margins may seem small, the dollar amount is substantial.
One study finds that the causes associated with high-net-worth giving have shown long-term growth. The Chronicle of Philanthropy released America’s Favorite Charities 2018, a list of the top 100 cause-driven nonprofit organizations that received the most cash and stock in the previous calendar year.54 Charities associated with high-net-worth giving, such as gifts to higher education, health, and medical centers, have fared especially well over time, growing 44% from 2007 to 2017.
High-net-worth giving is expected to continue to be an important part of charitable giving in the next few years in the wake of the TCJA. It should be noted that high-net-worth donors are not entirely insulated from the changes brought on by the TCJA: one recent study found that 59% of high-net-worth individuals planned to itemize their income tax returns in 2018 (down from 72% in 2017). Nevertheless, 84% of survey respondents also said they plan to continue to maintain their level of charitable giving even after the TCJA.55
Among the wealthiest Americans, assets continue to grow.
The net worth of the 400 wealthiest U.S. residents grew from $2.7 trillion in 2017 to a record $2.9 trillion in 2018, according to the annual Forbes 400 list.56 Each Forbes 400 member was worth an average of $7.2 billion in 2018, an increase from $6.7 billion in 2017. Many of these ultra-high-net-worth donors have made a long-term commitment to philanthropy through the Giving Pledge.
The Giving Pledge is an initiative started by Bill Gates and Warren Buffet, in which participants promise to give away more than half of their fortunes during their lifetime or after their deaths.57 The Giving Pledge is not a legally binding obligation to disburse funds, but rather a way to publicly commit to philanthropic activities and encourage other high-net-worth individuals to donate to charitable causes.
Created in 2010, the Giving Pledge includes 187 of the world’s wealthiest individuals and families as of December 2018.58 Among them, at least 143 reside in the United States.59 Giving Pledge participants are interested in a diverse range of areas and causes, but patterns do emerge. Consistent with academic research on high-net-worth giving trends, their primary areas of interest are health, human services, education, and arts and culture.60
Engaging Diverse High-Net-Worth Donors
Although some patterns in high-net-worth giving have been found, the group is far from homogenous.
Recent studies have highlighted patterns that arise when high-net-worth donors are separated by age, gender, and race/ethnicity. Researchers are just beginning to study and better understand the motivations and patterns associated with high-net-worth donors of color.61
A recent report found that African-American donors prioritized giving back to their communities, and were highly strategic about their philanthropic goals62. Another recent study found unique differences in the African-American high-net-worth donor population as well. According to the Indiana University Lilly Family School of Philanthropy’s most recent U.S. Trust Study of High Net Worth Philanthropy, 72 percent of African-American high-net-worth donors gave to basic needs charities, far outpacing the rate of giving to basic needs charities by the overall study population (54 percent).63 In addition, 49 percent of the overall study population gave to religious organizations, but a far greater percentage of African-American donors (64 percent) and Latino/Hispanic donors (59 percent) gave to these causes.
Women tend to give in patterns that differ from male donors. Not only are women more likely to volunteer than men, but they also reported participating in impact investing at a higher rate than the general study population of the U.S. Trust Study of High Net Worth Philanthropy.64 One study found that within women’s giving patterns, differences emerge between women of different generations, with Millennial women more likely to donate to many different charities and use new giving vehicles, and Baby Boomer women more likely to focus their giving strategically on only a handful of organizations.65
These patterns are particularly important to observe as the number of high-net-worth women continues to grow: 57 women were named on the most recent Forbes 400 list, growing from 55 female Forbes 400 members in the previous year.66 The wealth of the women on the list also grew 4.8 percent, from $315 billion in 2017 to $330 billion in 2018.67